Nuclear energy is just one example of how America’s aggressive, expansionist policy abroad can cause real damage to key sectors of the US economy. The Democrat John Kerry, who is threatening Russia with unilateral economic sanctions, has apparently not deemed it important to anticipate the consequences of his statements even one step in advance. Kerry’s and Obama’s global ambitions to promote “democratic values” are much more important to the White House than the jobs of ordinary Americans who are employed at nuclear power plants – but they rarely vote Democratic anyway.
When discussing the recently popular topic of possible sanctions, observers traditionally focus on the fact that it is the relationship between Russia and the European Union that suffers the most from mutual constraints, because the economic ties between the United States and Russia have not been as strong. In this context, it’s worth remembering and mentioning an American industry that is critically reliant on one type of import from Russia – fuel for nuclear power plants.
This surprisingly significant dependency was established back in the early 90s after the launch of the HEU-LEU program, which entailed the processing of highly enriched uranium (HEU) from Russian nuclear warheads into low-enriched uranium (LEU) that was sold in the United States as fuel for nuclear power plants.
One should keep in mind that although there are plans to close some nuclear power plants (for reasons that include the low cost of natural gas in the US), nuclear energy in the United States still provides about 100 GW of power (for comparison, the entire Russian energy industry produces approximately 230 GW).
When discussing foreign imports of nuclear fuel for US atomic power plants, one must distinguish between two components, which are only partially interconnected. First, there is the actual raw material for the fuel, which is based on natural uranium, and this also presents a problem for the Americans. But the main issue is the capability to separate the isotopes, or in other words, to enrich the uranium.
They only produce 10% of what they need
In 2014, 48 million pounds of uranium will be needed to feed American nuclear power plants (calculated in terms of unenriched fuel in the form of U3O8 oxide). This is the arbitrary unit we use, since the price quotes on the global market are also traditionally expressed in dollars per pound of uranium oxide.
Last year the HEU-LEU program came to a close. In February, the EIA, the statistical office within the American Department of Energy, published data on the US production of uranium concentrate (calculated in terms of U3O8 uranium oxide) in 2013. Over the course of two years, the output of this raw material for nuclear fuel increased by 21%. The EIA points out that this increase partially offsets the shutdown of the HEU-LEU program. But even with this in mind, the production of uranium oxide in the United States amounted to only 4.8 million pounds – exactly 10% of the required quantity of fuel.
Thus it is no surprise that in 2012, 83% of the uranium raw materials that were needed were purchased abroad, because the US could only meet 17% of its own requirements (this statistic probably includes the American program to convert HEU into LEU, thus the US market share comes to more than 10%). The geographic distribution of uranium imports to the US is shown in the diagram below (a total of 58 million pounds, calculated in terms of U3O8):
Source: U.S. Energy Information Administration, Uranium Marketing Annual Report
Nevertheless, it’s true that no particular problems with raw materials of uranium are currently visible on the world market, which is primarily due to the shutdown of reactors in Japan and some in Europe, plus one now in South Korea. Despite the end of the HEU-LEU program, the quotes have not risen. As a result, prices for uranium oxide remain stable, at a low level of $35 per pound. Back in 2006-2007, the spot prices for this raw material climbed as high as $130 per pound.
They only enrich 20% of what they need
But acquiring uranium ore or uranium concentrate is only half the battle. The bigger issue is converting it into fuel, and the main phase of that is the enrichment process. And this is where the American dependence on Russian imports is most apparent. As a reminder, a business’s capacity to enrich uranium is described using what are called SWUs (separative work units). And enrichment is currently (or to be more precise – until recently) the responsibility of private businesses in the US.
Once the HEU-LEU program began, Russian fuel spent 15 years expanding its hold on the uranium-enrichment market, shutting out “home” facilities in the US. The United States uses about 16 million SWUs each year, of which almost six million, or 35-40% of that total, has been provided by the Russian HEU-LEU program. Approximately the same amount comes from other foreign enrichment facilities, primarily in Europe. On its own, the US is able to produce only about three million SWUs per year, about 20% of what it needs.
The HEU-LEU program ended this year. However, an agreement has been signed to extend the contracts. Although strictly speaking this is not an extension of HEU-LEU, but rather the sale of commercial supplies of low-enriched uranium. Under the new agreement (for 2013-2022), the contract assumes a gradual increase in deliveries, so that by 2015 those will make up about half the level of shipments that were seen under the “old” HEU-LEU program.
Source: U.S. Energy Information Administration: Form EIA-858, Uranium Marketing Annual Survey
It remains an open question as to what extent Russian imports under the new contracts will replace the HEU-LEU program in 2014. But America’s capacity is truly limited to the three million SWUs already in use, as can be seen in this table. The old uranium-enrichment plant belonging to USEC, a subsidiary of an American corporation, is now closed. A new one has not yet been built, and it is possible that the completion of its construction is being delayed because there is a good chance USEC will declare bankruptcy. The remaining American capacity is generated in the US by Europe’s URENCO, which accounts for those three million SWUs in question, but by 2015 that number is expected to rise to six million SWUs. For comparison, Russia produces 25 million SWUs.
The US can only make up for the missing enrichment capacity from Russia by increasing the amount it orders from abroad, and even that will only help in part. Just as with uranium raw materials, the US is benefiting from the fact that so many nuclear power plants around the world are closed (thus the cost of one SWU has decreased in recent years to as little as $100). But if Japan restarts its shuttered reactors this summer, the alternatives to Russian LEU will vanish altogether. In any case, contracts have already been signed to continue with the Russian imports, and those deliveries have already begun – so if mutual sanctions go into effect, the American nuclear industry will experience significant hardship.
Originally published in Russian by ODNAKO Magazine (odnako.org) – Alexander Sobko